Crude oil: International institutions predict overall supply-demand balance
2024-04-18
■ International institutions tend to balance their crude oil supply and demand forecasts, and the fluctuation range of WTI prices is prone to expand
■ The retaliatory attacks between Israel and Iran may raise concerns about the risk of WTI price increases
As of April, international institutions have completed their predictions on the world's crude oil supply and demand. Regarding global crude oil demand, the Organization of the Petroleum Exporting Countries (OPEC) predicts a 2.24% increase in 2024 compared to the previous year (2023: 121.1 million barrels → 2024: 144 million barrels) and a 1.77% increase in 2025 (162.5 million barrels). The US Energy Information Administration (EIA) has maintained a growth rate of 1.42% for 2024 (2023: 110 million barrels → 2024: 124.3 million barrels) and revised the growth rate for 2025 to 1.35% (138.1 million barrels). On the other hand, the International Energy Agency (IEA) has revised the growth rate for 2024 to 1.18% (2023: 120 million barrels → 2024: 132 million barrels) and predicts a growth rate of 1.07% (143 million barrels) in 2025. Although there is consensus on moderate demand expansion, OPEC is relatively optimistic in predicting demand growth in emerging countries such as China and India, while the IEA remains cautious. They believe that the stage of demand expansion after the COVID-19 epidemic has basically ended, and the current high oil price is also one of the restraining factors of demand. In addition, they predict a slowdown in China's economic growth, coupled with the popularization of new technologies such as electric vehicles (EVs) and high-speed rail, will slow the growth of crude oil demand.
As for global crude oil supply, EIA predicts growth of 0.83% in 2024 (118 million barrels in 2023 → 126.5 million barrels in 2024) and an increase of 1.91% in 2025 (146.1 million barrels). The IEA predicts that OPEC member countries and non-member countries, known as OPEC+, will continue to voluntarily reduce production until the end of the year, with an expected growth of 0.78% in 2024 (2023: 121 million barrels → 2024: 129 million barrels) and an expected increase of 1.55% (145 million barrels) in 2025. The IEA forecasts an oversupply for global crude oil supply and demand in 2024, while the EIA forecasts an oversupply. As of 2025, both institutions expect an oversupply. However, these surpluses are small, and the overall supply and demand of crude oil tend to be balanced. Even minor changes in demand and supply may lead to an increase in the fluctuation of WTI prices.
When looking into the future global crude oil supply and demand, the demand side will focus on the degree of economic slowdown in Europe and America and the growth rate of emerging countries centered on China. In terms of supply, the first step is to evaluate the effectiveness of OPEC+ voluntary production reduction and the impact of increased production on supply in non-OPEC countries such as the United States and Brazil. Furthermore, the situation in the Middle East still deserves attention. Israel has postponed its cabinet meeting on retaliatory attacks against Iran to the 17th, and other countries are demanding restraint. We need to monitor Israel's movements closely. If retaliatory attacks between Israel and Iran continue, it will increase concerns about crude oil supply, potentially pushing WTI prices into the $90 or above range.
■ The retaliatory attacks between Israel and Iran may raise concerns about the risk of WTI price increases
As of April, international institutions have completed their predictions on the world's crude oil supply and demand. Regarding global crude oil demand, the Organization of the Petroleum Exporting Countries (OPEC) predicts a 2.24% increase in 2024 compared to the previous year (2023: 121.1 million barrels → 2024: 144 million barrels) and a 1.77% increase in 2025 (162.5 million barrels). The US Energy Information Administration (EIA) has maintained a growth rate of 1.42% for 2024 (2023: 110 million barrels → 2024: 124.3 million barrels) and revised the growth rate for 2025 to 1.35% (138.1 million barrels). On the other hand, the International Energy Agency (IEA) has revised the growth rate for 2024 to 1.18% (2023: 120 million barrels → 2024: 132 million barrels) and predicts a growth rate of 1.07% (143 million barrels) in 2025. Although there is consensus on moderate demand expansion, OPEC is relatively optimistic in predicting demand growth in emerging countries such as China and India, while the IEA remains cautious. They believe that the stage of demand expansion after the COVID-19 epidemic has basically ended, and the current high oil price is also one of the restraining factors of demand. In addition, they predict a slowdown in China's economic growth, coupled with the popularization of new technologies such as electric vehicles (EVs) and high-speed rail, will slow the growth of crude oil demand.
As for global crude oil supply, EIA predicts growth of 0.83% in 2024 (118 million barrels in 2023 → 126.5 million barrels in 2024) and an increase of 1.91% in 2025 (146.1 million barrels). The IEA predicts that OPEC member countries and non-member countries, known as OPEC+, will continue to voluntarily reduce production until the end of the year, with an expected growth of 0.78% in 2024 (2023: 121 million barrels → 2024: 129 million barrels) and an expected increase of 1.55% (145 million barrels) in 2025. The IEA forecasts an oversupply for global crude oil supply and demand in 2024, while the EIA forecasts an oversupply. As of 2025, both institutions expect an oversupply. However, these surpluses are small, and the overall supply and demand of crude oil tend to be balanced. Even minor changes in demand and supply may lead to an increase in the fluctuation of WTI prices.
When looking into the future global crude oil supply and demand, the demand side will focus on the degree of economic slowdown in Europe and America and the growth rate of emerging countries centered on China. In terms of supply, the first step is to evaluate the effectiveness of OPEC+ voluntary production reduction and the impact of increased production on supply in non-OPEC countries such as the United States and Brazil. Furthermore, the situation in the Middle East still deserves attention. Israel has postponed its cabinet meeting on retaliatory attacks against Iran to the 17th, and other countries are demanding restraint. We need to monitor Israel's movements closely. If retaliatory attacks between Israel and Iran continue, it will increase concerns about crude oil supply, potentially pushing WTI prices into the $90 or above range.